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Industrial Development & Economic Growth in Punjab

Last updated on Mar, 9 2021

Economic Snapshot
Per capita Income


Punjab, one of the northernmost states of India, is bordered by the Pakistani province of Punjab to its west, Jammu & Kashmir in the north, Himachal Pradesh in the northeast, Haryana in the south and southeast, and Rajasthan in the southwest.

The confluence of five rivers makes Punjab’s agricultural land rich and productive. Approximately, 82% of the state’s land is under cultivation compared with the national average of 40%.

Punjab’s Gross State Domestic Product (GSDP) (in Rs.) is expected to increase at a Compound Annual Growth Rate (CAGR) of 10.55% between 2015-16 and 2020-21, reaching Rs. 6.44 lakh crore (US$ 91.41 billion).

The state provides investment opportunities in sectors such as textiles, agro-based industries, IT & ITeS, automotive and auto components, sports goods, and light engineering goods.

Punjab is the source of 95% of India’s woollen knitwear production, 85% of India’s sewing machine production, and 75% of India’s sports goods production.

Punjab is known as the ‘Breadbasket of India’ and also led to first Green Revolution in the country. By 2025, it is expected that the state will be among the leading producers of non-food grains as well as exporter of various agri-products. Punjab alone contributes to 19% (wheat), 11% (rice), 5% (cotton), 10% (milk), 20% (honey) and 48% (mushrooms) grown in the country. Total foodgrain production in the state stood at 31.55 million metric tonnes in 2018-19. Horticulture production in the state reached 7,342.12 thousand metric tonnes in 2018-19 as per the third advance estimates.

Punjab’s road, rail and air transport network, connectivity, construction of bridges and infrastructure facilities are rated among the best. As of November 2020, Punjab had a total installed power generation capacity of 14,352.27 MW, of which 8,741.48 MW was contributed by thermal power, 3,809.12 MW by hydropower, 1,604.85 MW by renewable power and 196.81 MW by nuclear power.

According to the Department for Promotion of Industry and Internal Trade (DPIIT), cumulative FDI inflow in Punjab1 amounted to US$ 3.23 billion between April 2000 and March 2020. Between October 2019 and September 2020, FDI inflows in Punjab stood at US$ 118.58 million.

During 2019, Punjab Government received 57 IEMs with proposed investment of Rs. 1,843 crore (US$ 263.70 million).

Punjab has easy procedures to set up a business according to a study by the World Bank and KPMG. Punjab had set up a Bureau of Investment Promotion (BIP) in December 2013 for one-stop clearance of investment proposals. BIP has powers to give approvals related to pollution control, excise and taxation, labour issues, factory licences, boiler registrations, town and country planning, land and power-related issues.

Punjab has emerged as a key hub for textile-based industries including yarn, readymade garments and hosiery. With the development of apparel parks, favourable textile policy and other incentives for the creation of textile infrastructure, the state offers opportunities for investment.

Total merchandise export from Punjab was about US$ 5.61 billion in FY20 and reached US$ 3.22 billion between April and November 2020.

Key Sectors:

  • At current prices, the primary sector contributed 28.39% of the state’s Gross Value Added in 2019-20. Food processing is considered to be a focus area in the state and the Government has made various efforts in aiding deserving investments for the food processing industry. Basmati rice is the most exported commodity from the state. Exports reached US$ 874.15 million in FY19 and US$ 482.14 million between April and December 2020.
  • Three mega food parks and one food park in Punjab was notified by the Ministry of Food Processing Industries, out of which, one mega food park is already operational and second one started partial operation since April 2019.
  • Punjab’s IT policy and the incentives offered to the IT industry are aimed at promoting Punjab as an attractive destination for the industry. Mohali has been developed as an IT and ITeS hub in the state.
  • Punjab is among the largest producers of cotton and blended yarn as well as mill-made fabrics in India. Ludhiana is often referred to as the ‘Manchester of India. In FY20, Punjab exported cotton yarn worth US$ 463.76 million and readymade garments (manmade fibres) worth US$ 206.03 million.

1 - Includes Chandigarh, Punjab, Himachal Pradesh, and Haryana.

Punjab State Presentation

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Punjab Map